Source: Talk Outside
I came across an interesting article. According to CoinDesk, in the recent 13G filing, BlackRock (BLK) disclosed that it currently holds a 5% stake in MicroStrategy (MSTR), equivalent to approximately 11.2 million shares. As of September 30, 2024, this is an increase of 0.91% from the previous 4.09% stake. As shown in the image below.
BlackRock's IBIT is currently the largest BTC ETF, with assets under management exceeding $56 billion as of the time of writing. As shown in the image below.
MicroStrategy is the largest institutional holder of Bitcoin, currently holding 471,107 Bitcoins on its balance sheet, with a value exceeding $45 billion (at an average purchase price of around $64,524) as of the time of writing. As shown in the image below.
It can be said that these two are giants, and their actions will have a significant impact on the trend of Bitcoin.
1. A powerful alliance or a brewing Black Swan?
So, we may need to continue thinking about a question here: Are they trying to form a powerful alliance and then achieve the goal of the US controlling Bitcoin? Or is one of them using capital to secretly undermine and try to orchestrate a Black Swan event for Bitcoin?
Let's speculate on the plot (note, this is just a hypothesis):
The first scenario is to continue acquiring until BlackRock completely controls MicroStrategy. In this case, they will not only become the world's largest BTC ETF fund, but also the institution with the largest holding of Bitcoin spot.
The second scenario is to secretly undermine. For example, first manipulate the price of Bitcoin to drop, then BlackRock takes the opportunity to start selling MicroStrategy's shares, continue to create a panic sentiment, forcing MicroStrategy to sell its Bitcoin, and gradually buy back the sold Bitcoin at low prices, and eventually directly let MicroStrategy go bankrupt and become the sole dominant player.
If the second scenario happens, it would undoubtedly be a new Black Swan event for the market, and it may even lead to a chain reaction in the market, and even BlackRock may not be able to save the day, and the market will collapse in a short period of time (similar to the FTX collapse). But capital has never cared about any sentiment.
Of course, the above is just our imagination of the possible plot, and I will still strictly follow my own position plan and will not be affected by any news. As for how the future market will go, it still needs time to verify. But we just need to be clear about one thing, assuming (note, this is just an assumption) that the Black Swan event occurs, who will ultimately be the real winner?
Interestingly, just yesterday (February 9), MicroStrategy's founder Michael Saylor hinted in an interview that he will destroy the Bitcoin private keys after his death to ensure that his Bitcoin will never be sold. As shown in the image below.
As mentioned before, all the above are just fantasies, guesses and assumptions. I can't see through how the institutional bigwigs are laying out their plans, but as mentioned in the previous article by Talk Outside, we have always kept a 10% position as ammunition to deal with a major Black Swan event. If the second scenario mentioned above really happens, we will not hesitate to go All In with the remaining 10% reserved position to buy Bitcoin when the market collapses, and then hold on to it.
If we put aside the short-term perspective and the desire to make quick money, and look at it from a 5-year, 10-year... perspective, Bitcoin is never too expensive to buy now!
2. What does the increase in Ethereum short positions mean?
According to on-chain data, the Unhedged Short position has reached a relatively high level, even the highest in the past year, indicating that the market sentiment is currently very bearish on Ethereum. As shown in the image below.
But as mentioned in our previous article, there is an interesting phenomenon here, that is, on the one hand, the price of ETH is plummeting, but on the other hand, the capital inflow of ETF is still continuing, and even a record-breaking inflow has occurred. As shown below.
In just the past trading week (February 3 to February 7 Eastern Time), the net inflow of ETH ETF was $420 million, with the largest inflow being BlackRock's ETH ETF (ETHA) with a weekly net inflow of $287 million.
And if we continue to pay attention to the trading volume of ETH, we can actually find that the trading volume has remained strong despite the price decline, with two obvious time points:
One is around January 21, the time of Trump's inauguration, when the trading volume of ETH surged significantly.
The other is on February 3, when ETH plummeted, the trading volume also surged significantly.
But so far, after a week, ETH's price doesn't seem to be showing any signs of recovery. When BTC rebounds, ETH remains stagnant, and when BTC declines, ETH follows suit, and many people's patience is gradually being worn away.
As of the time of writing, ETH's price is still around $2,600, which is about a 46% drop from the previous bull market's peak. As shown in the image below.
So, there is a question worth thinking about: Why are people (hedge funds) so keen to short Ethereum?
If it was in the past, we could still understand the shorting, as Ethereum was always at risk of being labeled as a security by the SEC. But with the crypto-friendly President Trump taking office, the WLFI (World Liberty Financial) under the Trump family is also buying ETH.
Although there have been KOLs on the internet shouting that the President is selling ETH and crashing the market, the bears are coming..., but people have only seen that WLFI's public wallet has deposited the coins to Coinbase, have you actually seen the President sell the coins and convert to USDT?
However, as described by a member in the group, seeing your favorite man go to that kind of place, although rationally speaking, he may not necessarily do that kind of thing, it will still make you feel uncomfortable.
Or we can think about the problem from a more benevolent perspective. If I were WLFI, I wanted to continue to buy a large amount of ETH, I wouldn't publicly disclose my trading records either, the more I buy, the more retail investors will blindly follow, why would I want to help the retail investors?
If you believe the saying "A man's mouth is a liar, the devil is a cheat", then whether WLFI is a scumbag or not, you need to judge for yourself. As shown in the image below.
Let's get back to the main topic. As mentioned above, from the perspective of ETF capital inflows and the "policy side" (including ETH being the first Altcoin to pass the US spot ETF), the situation for ETH should be much better than before. But why is it still being despised by the majority of retail investors?
Let's look at this from a few different angles:
From the perspective of retail investors, the vast majority of retail investors only look at the rise and fall of prices, and when it goes up, it's a bull market and they should continue to buy, and when it goes down, it's a bear market and they should go and spit on it.
From the market perspective, this may be a comprehensive and complex issue, such as possible operations from hedge funds, market manipulation by large institutions, lack of innovation in Ethereum itself, and so on.
Of course, it may also be that institutions are playing a big game, and perhaps the institutions have already been preparing for a decline (collapse), and when they have not accumulated enough chips (discourse power), they will not lift the sedan chair for the retail investors who like to cling to the past.
Looking at the current ETH/BTC exchange rate, the performance of ETH has seriously lagged behind BTC, even returning to the level of 2020, as shown in the figure below.
Also, from the current weekly K-line, the trend of ETH does not seem to be very good, for example, the moving average of RSI seems to have started a downward trend, as shown in the figure below, but one thing is that you can try to make a simple comparison with the period around May 6, 2024.
So, based on the current relatively complex overall situation, will ETH experience a "short squeeze" in the future?
We don't provide the answer here, because everyone may have a different answer, so we'll just leave it for you to think about.
Supplementary knowledge: What is a short squeeze?
When there are a large number of investors Short in the market, if the market suddenly rises, these short traders will face losses and be forced to buy back to close their positions (cover their short positions), this large-scale forced repurchase will further push up the token price, thus forming a short squeeze.
While revering the market, you also need to maintain a certain patience, if you don't want to lose money in the volatility, then seriously consider your own risk tolerance and strictly manage your position according to your own risk preference level.
That's all we'll talk about today. Have a good day!
